As part of a progressive disciplinary process, we sometimes require employees to sign a document in which the employee acknowledges his past deficiencies and the fact that if his performance does not measurably improve, his employment will be terminated. (A “Last Chance Agreement”, because this is his last chance…..). There is nothing inherently illegal or wrong with an LCA, and they can be useful tools, both in an attempt to rehabilitate the employee and as proof that the employee was fully aware of the true reasons for his termination, if a termination occurs.
However, employers sometimes give in to the temptation to overreach in an LCA and include waivers of potential employment-related claims. That is precisely what got the Department of Veterans Affairs in hot water in Illinois a couple of months ago. The facts are as follows:
Mr. Lester, a sixty year old African American male worked for the Department of Veterans Affairs. Mr. Lester filed a race discrimination claim against the Department. As part of a mediated settlement, Mr. Lester was transferred to new location and required to sign an LCA. The LCA contained a provision that required Mr. Lester to waive all future claims that he may have against the Department. Shortly after his transfer the Department fired Mr. Lester. (Smells a little fishy?)
As one would expect, Mr. Lester sued the Department, claiming in part that the provision requiring the waiver of future claims constituted a materially adverse action that would dissuade a reasonable person from engaging in protected activity and, as such, constituted unlawful retaliation against Mr. Lester for filing a claim of discrimination against the Department. (The logic being-if a worker filed a claim of discrimination, the department would force you to either waive all future claims as part of the LCA or else be fired, thus reducing workers’ propensity to file complaints in the first place.)
The take-away from this case is: We should be extremely cautious in presenting employees with waivers that require them to waive or release future claims or causes of action. When I say “extremely cautious,” I mean don’t do it. Waiving claims arising out of past conduct is probably OK, but waiving claims arising out of as-yet-to-occur, future conduct is probably not enforceable and may well give rise to a retaliation suit, as the Department of Veterans Affairs learned.
I was in state court this week, the 19th Judicial District to be precise, arguing an often-overlooked provision of our non-compete statute. The opposing party, let’s refer to them as “Overreaching, Money-Grubbying Bully” or OMGB for short, was attempting to enforce a non-compete agreement against my client, who we will call “Winner.” Specifically, OMGB claimed that my client was in violation of the agreement because he began to solicit customers of OMGB immediately after his services as an independent contractor had been terminated.
We argued successfully that while our non-compete statute allows an employer and employee to agree that an employee will not: 1) engage in business similar to that of her employer or 2) solicit customers of her employer after her employment ceases, on its face the statute only allows an independent contractor to agree that she will not: 1) engage in business similar to that of the party with whom she has contracted. The statute contains no language that would allow an independent contractor to be prevented from soliciting customers of the party with whom she has contracted.
In this instance, my client was not engaging in a competing business in any prohibited parishes, she was merely soliciting customers of the party with whom she had contracted. Although I believe that the difference in the language of the statute as it applies to employees and an independent contractors was due to legislative oversight (perish the thought) rather than intent, the difference is nonetheless there. So, if you are drafting a non-compete agreement between your company and an independent contractor, remember that while you can prohibit them from engaging in competition with you, you probably cannot prevent them from soliciting your employees.
You may recall that in the last year of the Obama administration the National Labor Relations Board issued a Memorandum declaring that a number of what most of us consider to be common sense HR policies were “presumed illegal” because they could have a “chilling effect” on employees’ Section 7 rights.
On Wednesday the NLRB reversed itself and issued a Memorandum stating that nine of these standard HR policies will now be “presumed lawful.” This Memorandum will require some employers to modify their Handbooks; for others, only the application of their existing policies will change. In both instances, the changes will be to the benefit of employers. I have provided a brief summary of the new “presumed lawful” policies for your perusal as well as a couple that are still presumptively unlawful. Continue reading “Logic Prevails At The NLRB! Some Common Sense HR Policies Are Legal Once Again!”
As most HR professionals are aware, the Fair Labor Standards Act (FLSA) requires that non-exempt employee be paid for rest breaks of up to 20 minutes. Contrary to the common misperception that the Act requires employers to allow two paid breaks per shift, in most industries, it actually does not mandate any certain minimum or maximum number of paid breaks per shift.
Conversely, the Family and Medical Leave Act (FMLA) require employers to allow employees short breaks when certified as necessary by a health care provider. Unless the employer specifies otherwise, FMLA breaks are usually unpaid.
You see the inherent conflict set up between the FLSA (you must pay for short breaks) and the FMLA (FMLA leave is generally not compensable working time). For example, if an employer allows its employees to take three paid, fifteen minute beaks per day, can it not pay an employee for taking one, fifteen minute FMLA-qualified break per day without violating the FMLA or FLSA? Will this constitute retaliation or interference under the FMLA?
Continue reading “The Perfect Storm: A Convergence of Unpaid Rest Breaks, the FLSA and the FMLA”
Chalk one up for the good guys! In a 5-4 vote, the United States Supreme Court held today that employer-mandated arbitration provisions containing class and collective action waivers are enforceable. I realize that this sounds a bit esoteric to get so worked up about, (I have used TWO exclamation points already.) but this ruling has the potential to save you a LOT of money.
As you know, class and collective actions are incredibly expensive to defend and they often result in hugely costly settlements and judgments. This is particularly true when dealing with collective actions under the Fair Labor Standards Act. As unfair as it seems, under the FLSA employers are usually only allowed to depose a very small sampling of the collective plaintiffs. The Courts extrapolate the data from this small representative group to the entire class to determine if the employer is liable and how much it owes. Often, most members of the collective group do nothing more than sign an opt-in card and then cash their settlement check. Since employees know that they will never be deposed or have to testify at trial, they are inclined to join these types of suits whether or not they have actually been wronged or suffered any damages.
The ruling today gives employers a way to significantly reduce the likelihood that employees who have not been harmed bring FLSA claims. We now know that with a valid arbitration agreement in place, each employee will be required to arbitrate their FLSA claim against the employer separately, rather than as part of a collective group. In arbitration, each employee will have to affirmatively prove up their own case. This will significantly reduce your chances of being sued under the FLSA.
As with most things “legal,” the details of the agreement matter, and this is not a total cure-all for all FLSA liability. But, for many employers, a properly drafted arbitration agreement containing a class/collective action waiver could save your company literally millions of dollars. Consult with your legal counsel to ensure that your arbitration agreement will pass legal muster.
The IRS just issued a FAQs sheet regarding the new Tax Cuts and Jobs Act of 2017 that created the Paid Family and Medical Leave Tax Credit. The tax credit allows eligible employers to claim a general business tax credit of up to twenty five percent of the wages paid when employees take paid family and medical leave.
Generally, in order to utilize the tax credit, an employer must have a written policy allowing for at least two weeks of paid FMLA and pay employees on FMLA leave at least fifty percent of their usual wages receive. In 2018, the tax credit will only be available for payments to employees who made less than Seventy Two Thousand Dollars in 2017.
Most forms of paid leave, (vacation leave, personal leave or sick leave) will not be considered paid FMLA leave for purposes of the Act and such payments will not be applicable for the tax credit.
Lastly, the FAQ indicated that the IRS was going to issue other FAQs addressing various aspects of the FMLA tax credit. I will keep an eye out for these FAQs and send out new updates as they are issued.
Under President Obama, the U.S. Department of Labor stopped issuing specific Opinion Letters in 2009, in favor of issuing more general Guidance. After President Trump took office, the DOL announced that it would begin to once again issue Opinion Letters. This is a good thing for employers. Although the Opinion Letters do not have the force and effect of law, they do tell us how the DOL is going to interpret the law.
On April 12, 2018, the DOL issued two new Opinion Letters, each dealing with specific aspects of the Fair Labor Standards Act.
In the first Opinion Letter, an employer asked if it was required to compensate non-exempt employees for fifteen (15) minute breaks that it was required to allow employees under the Family and Medical Leave Act. The employee’s physicians certified that they needed to take a fifteen minute break every hour (eight, fifteen minute breaks in an eight hour shift). The DOL acknowledged that such breaks were primarily for the benefit of the employees in question and that the FMLA states that FMLA-required breaks may not be compensable time. As such, the DOL indicated that the breaks were not compensable time. However, the DOL also noted that the employees who were taking FMLA-protected breaks were nonetheless also entitled to the same paid breaks as their co-workers. So, if the employer allowed all of its employees to take two, paid fifteen minute breaks a day, then the two employees taking eight, fifteen minute breaks a day should be paid for at least two of those breaks.
Continue reading “The DOL Has Begun to Issue Opinion Letters Again – And You Should Read Them”